Outlook For Wimbledon Property and Beyond

It seems as if the decline in property values is slowing, at least for the time being. According to figures released by Hometrack, house prices declined by a national average of just 0.6% in March. This is the slowest rate of decline for ten months and may provide some cause for optimism.

Officially, property values have fallen by only 10% over the last 12 months but speak to almost any estate agent in Wimbledon and they will tell you that prices for houses and flats in the area are actually about 25% below their peak from the third quarter of 2007.
Regardless, the estate agents in Wimbledon Village are currently more optimistic than they have been for many months, buoyed by the rising levels of market activity witnessed since February. An increasing number of potential buyers are registering and site visits are on the up albeit from almost negligible levels in December/January.

However, there remains a significant value gap between the intentions of buyers and the expectations of sellers. What this means from a transactional perspective is a steady but low volume of transactions as forced sellers have no option but to accept price dilution often in circumstances such as divorce. The hope is that as the market steadies so the valuation gap will narrow and volumes recover aided by a more accessible mortgage market and investors anticipating a rapid market recovery.

In the opinion of other commentators we are currently in a deceptively calm interim period before the full impact of the recession upon the domestic property market is felt. Their argument has three components. First, another 1 million people will be made redundant in the UK over the next 18 months including tens of thousands of City workers (investment bankers, commercial and property lawyers, fund managers, private equity and hedge fund managers and consultants) which will directly effect the wealthier suburbs of London such as Wimbledon, Putney and Clapham.

Secondly, interest rates will rise for those who are currently on 2 -3 year base rate trackers from 0.5% as those deals expire and they are forced to switch into much higher fixed or floating rate deals at 3.5%. Thirdly, rental rates which have fallen 30% in the last 12 months will continue to fall as expensive expat employees are repatriated to the US etc. The combined impact it is argued will be a massive reduction in purchase demand for flats and houses on the one hand and increased supply on the other as owners of rental properties can’t afford to hold out any longer. In that scenario, so it is argued, the value of flats and houses will plunge. Make up your own mind.